The Economic Benefits of Reducing Dropout Rates

The Alliance for Excellent Education released a study estimating the benefits of reducing the dropout rate among students of color in the country’s 50 largest cities. According to the study, the most recent estimate shows that high school graduation rates for African American, Latino, and American Indian students is slightly higher than 50%. This is more than 20 percentage points lower than that of their white peers.

If the dropout rate in Boston–estimated at 10,400 students in the class of 2008– were cut in half, the study estimates that this single class of new graduates would likely earn the following amounts of combined income in an average year:

  • African American: $6.9 million
  • Latino: $9.5 million
  • American Indian: $200,000
  • Asian American: $5.7 million

As a result of their increased wages and higher levels of spending, state and local taxes in Boston would likely grow by as much as $2.3 million in an average year. The country would benefit as a whole as well; the study says that if half of the nation’s 600,000 dropouts graduated, the benefits would likely include:

  • increased earnings of $2.3 billion in an average year;
  • increased home sales of an additional $5.9 billion in mortgage capacity over what they would spend without a diploma;
  • an additional 17,450 jobs from the increased spending in their local areas;
  • an increase in the gross regional product by as much as $3.1 billion;
  • an additional $1.6 billion spent and an additional $636.6 million invested each year;
  • an additional $158.6 million spent on vehicle purchases; and
  • increased tax revenues of $249.7 million.

Follow the Alliance for Excellent Education on Twitter: @All4Ed

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